A 312% surge in 6 days! OpenDoor becomes the latest "internet celebrity" in US stocks, retail investors are "celebrating like it's 1999"

Real estate technology company OpenDoor Technologies has surged for the sixth consecutive trading day, sparking a frenzy among retail investors and becoming the latest "meme stock" in the U.S. market.

The stock skyrocketed from around $1 to a peak of $4.97 in just six trading days, a staggering increase of 312%. On Monday (July 21), it briefly soared 121% during intraday trading, with trading volume skyrocketing to 1.9 billion shares, a 1700% increase compared to the three-month average. Due to the extreme volatility, the stock was temporarily halted during trading.

As OpenDoor becomes the latest "meme stock," its recent surge has ignited the entire "meme stock" sector, with the UBS Meme Stock Index rising 4% on Monday, and individual stocks like QuantumScape and Bit Mining also experiencing significant gains.

Analysts compare the current retail investor frenzy to the internet bubble of 1999. Matt Maley, chief strategist at Miller Tabak + Co, stated:

"Retail investors are partying like it's 1999, and the movements of some new meme stocks are strikingly similar to those back then, with OpenDoor's performance being the most notable."

Social Media Influencers Ignite the Craze

OpenDoor's recent surge began with a series of buy recommendations from Eric Jackson, founder of Toronto hedge fund EMJ Capital, on the social media platform X.

The stock quickly gained traction on Reddit's WallStreetBets forum and the Stocktwits platform, becoming the most actively traded stock on Stocktwits by Monday afternoon.

According to Bloomberg data, the short interest in the stock accounts for about 24% of its free float, providing fuel for a short squeeze. Analysts noted that this phenomenon is reminiscent of the GameStop incident in 2021, when retail investors rallied through platforms like Reddit, driving small-cap stocks to extreme volatility.

In addition to OpenDoor, other meme stocks also performed strongly. QuantumScape has risen nearly 200% in the past month, while Bit Mining has seen an 87% increase during the same period. Individual stocks like Beyond Inc., Beyond Meat, and Virgin Galactic have also shown significant gains.

Booming Options Trading with Clear Retail Characteristics

Data shows that OpenDoor's options trading volume hit a new high on Monday, exceeding 3.4 million contracts, more than doubling the previous day's record. About half of the trades were concentrated on options expiring this Friday, indicating that investors are betting on short-term volatility.

The most active $4.5 call options had an average trade size of only 11 contracts, suggesting that most of the activity came from retail investors. After 3 PM local time, the stock traded 26 million shares in one minute, plummeting about $1 in price, which subsequently triggered a circuit breaker Kim Forrest, Chief Investment Officer of Bokeh Capital Partners, warned:

"Volatility has its two sides; the surge of large-scale influencer stocks will always recede. Every sell transaction has a corresponding buyer, and if there are no buyers, the price will fall."

Company fundamentals are questionable, and risks cannot be ignored

OpenDoor went public in 2020 through a merger with a special purpose acquisition company, primarily operating as an online buying and selling platform for real estate in the United States. The stock had a brief glory in early 2021 but has since declined, accumulating a 51% drop before this round of surge this year.

Analysts remind that the crazy performance of influencer stocks is often disconnected from the company's fundamentals. As a real estate technology company, OpenDoor faces dual pressures from changes in the interest rate environment and adjustments in the real estate market, and investors should be wary of the risks brought by high volatility